Oil prices shot up to almost touch $61 a barrel on after U.S. government data revealed a sharp fall in fuel supplies last week. Inventories of distillate fuels, that include heating oil, fell around 5 million barrels last week after frigid weather brought snow and ice storms to the U.S. Northeast, the Energy Information Administration said. Experts were expecting a 2.9 million barrel decline.
On the other hand, market was hit in the wake of fires and interrupted power supplies that have reduced output at refineries in Texas, Pennsylvania, Colorado, Ontario and Delaware during the past two weeks. In addition to bullish sentiment, a string of U.S. refinery problems and other operational hurdles has raised supply concerns ahead of peak summer driving demand in the US.
Stockpiles of distillates including heating oil and diesel, dropped significantly by 3.8 percent to 5 million barrels. This also marked the biggest decline since September 2005, according to the U.S. Energy Department. This time around the U.S. and European nations are holding talks next week to start work on a second sanctions resolution against Iran’s nuclear program, adding to concern that Middle East oil supplies may be disrupted.
Therefore, oil prices are likely to remain volatile in the coming days as Iran standoff is likely to be intensified in coming days.
